The best settings is the lowest settings possible and taking advantage of any sound advancements. Mame itself tends to have a bunch of super sharp and super smooth settings. Removing them lets you see what the game really looks like. That is my personally opinion as I get tired of the Air-brushed look of the image advancement settings.

If you have a big HD screen it will not even matter as everything pans out because everything is made out of pixels ( unlike GBA games ). On an big HD display for the living room, the pixels will marge together.